Weekly Market Insights 09/29/2025

📈 Stocks wobble as AI Highs meet Caution Fed Rhetoric

Stocks in the U.S. swung between record highs and profit-taking last week as investors digested a potent mix of AI enthusiasm and “cautioning” Fed signals. The S&P 500 notched a gain to start the week after Nvidia’s $100 billion investment in OpenAI announcement rekindled excitement around artificial intelligence, but momentum faded as the week progressed. Federal Reserve Chair Powell’s warning that “there is no risk-free policy path ahead,” coupled with stronger-than-expected data on Q2 GDP, durable goods orders, and jobless claims, pushed Treasury yields higher and cooled risk appetite. By Friday’s close, the S&P 500 slipped about -0.30% for the week, though it currently remains up roughly 14% year-to-date on a total return basis.

Early-week leadership came from mega-cap tech and AI-linked names, which carried the Nasdaq and growth sectors to fresh highs. But the rally lost steam as yields tested September peaks, weighing on rate-sensitive areas such as real estate and utilities. Financials were mixed as the yield curve flattened, while industrials and materials drifted lower despite firm economic prints. Consumer discretionary shares ended the week on a cautious note after a weak University of Michigan Consumer Sentiment reading added to concerns about household pending.

💹 Rates, Dollar & Commodities

Bond and currency markets echoed the shifting policy narrative. The 10-year Treasury yield climbed mid-week on stronger economic data (that could push inflation higher) and hawkish Federal Reserve rhetoric, before easing slightly after an in-line PCE inflation report (the Fed’s preferred inflation gauge), kept hopes for a September rate cut alive. The U.S. dollar followed a similar path by firming as yields rose, then retracing into the weekend. This helped lift gold to fresh record highs above $3,800/oz as investors sought a hedge against policy uncertainty and lingering shutdown risks.

In commodities, oil prices softened as rising U.S. inventories and questions over global demand offset supply concerns. Industrial metals delivered mixed results: copper gained on reports of supply disruptions, while aluminum and nickel were capped by ongoing worries about Chinese demand.

🔎 Takeaway

Overall, markets remain caught between robust U.S. growth data and the Fed’s cautious stance, leaving investors to balance near-term rate-cut hopes against the risk of policy staying tighter for longer to combat inflation fears.

Source: Stockcharts.com

🔮 Looking Ahead – Jobs, the Fed, and a looming shutdown…

The coming week brings a heavy slate of market-moving catalysts, with labor data front and center. Tuesday’s JOLTS (Job Openings and Labor Turnover Survey) report will offer an early read on hiring appetite, while Friday’s September nonfarm payrolls and unemployment rate are the marquee releases and could reset expectations for a Fed rate cut later this year. Investors will also parse fresh reports on manufacturing activity, housing trends, and consumer confidence for signs of resilience or cracks in economic momentum.

Beyond the data, a packed calendar of Fed speeches will give policymakers another chance to shape the rate narrative after last week’s hawkish lean. Meanwhile, ongoing government shutdown negotiations in Washington could inject additional volatility if a funding deal isn’t reached before the October 1 deadline. Together, these events create a pivotal backdrop for markets as traders weigh robust U.S. growth against the Fed’s cautious stance and the rising stakes in Washington.

🌐 Broad Overview

Markets continue to balance several forces, but optimism has been playing a leading role. Anticipation of additional Fed rate cuts, enthusiasm around artificial intelligence, and resilient consumer demand have pushed the major stock indices to record highs. Inflation has eased sharply from its peak, with producer prices hinting at less margin pressure for businesses ahead. The labor market is cooling gradually but remains stable, pointing to a potentially sustainable expansion.

Treasury yields have pulled back on shifting Fed expectations. While volatility in bonds underscores lingering uncertainty, it may also reflect confidence that both growth and inflation are moving in the right direction.

Seasonal and political factors are also in play. Congress must pass spending bills or a continuing resolution by September 30 to avoid a government shutdown. Historically, the second half of September is challenging for stocks, and October tends to be the most volatile month. Despite these uncertainties, Q4 is historically the strongest quarter for stocks, and improving market breadth, with more sectors joining the rally, signals underlying strength as investors look ahead.

Should you have any questions regarding your current strategy or the markets in general, please reach out to your CIAS Investment Adviser Representative.